knowledge economy and society

The Knowledge Economy and the Knowledge Society

K 612Next-Generation Knowledge Management

Prof. Katsuhiro Umemoto

JAIST - Japan Advanced Institute of Science and TechnologyGraduate School of Knowledge Science

Ver 1.13 – 2006-10-15

The knowledge economy and society - Andre Saito 2

Have you ever thought about it?

What is the knowledge economy?

What is the knowledge society?

Why should we care about them?

Knowledge economy

Proposed definition

Economic properties of knowledge

New economic dynamics


Economy is about…

… production, distribution and consumption of goods and services

… markets and firms (in the case of capitalism)

… efficient allocation of resources Land (raw materials, natural resources) Labor (workers’ time and effort, expertise) Capital (equipments, plants, wealth, etc.)


What is the knowledge economy?

Knowledge has become the main resource The pace of innovation is accelerating

(not only in products and services, but also in processes, markets, sourcing, business models, etc.)

Capital

Knowledge

Land

Labor

Agricultural age

Industrial age

Knowledge age


C

K

Ld

Lb

Growth of K in the economy

Knowledge industriesKnowledge itself is the product/service (e.g., software, media, entertainment, consulting)

Knowledge-intensive industriesHigh level of K embedded in products/services (e.g., electronics, computer, pharmaceutical)

Traditional industriesCapital and labor still largely relevant (e.g., oil & gas, construction, transportation, retail)

Pac

e of

cha

nge

C

K

Ld

Lb

C

K

Ld

Lb


Knowledge has different properties

Low rivalry (usually said non-rivalry)

Use by one person does not diminish it

Low excludability (usually said partial excludability)

It is difficult to prevent others from using it

Knowledge is both input and outputToday’s innovations feed tomorrow’s

In other words… Knowledge is an infinite resource Knowledge tends to spread


The dynamics of K industries

Knowledge has positive externalities:

Spillovers (one person’s investment benefits others) Investment in research/education benefits many

Increasing returns (positive feedback) In costs: high upfront costs, low marginal costs In supply: the more you know, the easier to acquire In utilization: the more you use, the easier to use In demand: the more you sell, the easier to sell

Network externalities (adopters value )


Summary

Economic value comes mainly from knowledge The pace of innovation accelerates The economy evolves at different paces, with

different levels of knowledge intensity

Knowledge has different properties Low rivalry and excludability: tends to a public good Multiplicative effect: “shoulders of giants” effect

A new competitive dynamics, with new rules Increasing returns

Knowledge society

Alternative views

Network-based knowledge society

New social dynamics

Ethical challenges


Society is about…

… social relations (social interactions regulated by social norms, involving social positions and social roles)

… culture (patterns of social practice, norms of behavior, value systems, traditions, beliefs, etc.)

… institutions (social structures and mechanisms of social order and cooperation)

E.g., family, government, media, money, property, labor, etc.

Analysis of the K society is more complex!


Alternative views on the K society

Primacy of scientific knowledge (Bell 1973; Stehr 1994)

K as source of authority and basis of social stratification Scientific research as the ultimate source of knowledge

Rise of knowledge work (Drucker 1969; Reich 1991)

Fastest growing section of the workforce Knowledge workers own their knowledge

Networked society (Castells 2000; Benkler 2006)

Networked economy, work and social relations Enabled by information and communication technology


A network-view of the K society

Two basic conditions Society’s material needs are fulfilled, so there is

greater space for non-market behavior Tools for knowledge creation, utilization and sharing

become widely available

Knowledge production, distribution and consumption becomes decentralized

Exponential growth in knowledge availability Growth and expansion of social networks


Networked dynamics

Open culture Content is made publicly available

(e.g., the whole Web, creative commons, WiFi)

The Blogosphere and social networking Persistent, distributed, open conversation Leads to unmediated communication,

collective thinking and social mobilization

Peer production Radically decentralized cooperative production

(e.g., GNU/Linux, Wikipedia, Slashdot, Everquest)


The ugly side…

The network can be used for both good and bad

Questionable content Worthless (e.g., spam, ads, porn) Strongly biased (e.g., propaganda, prejudice) About unethical procedures (e.g., hacking, terror)

Questionable actions Identity cheating, spyware, etc. Bullying, defaming, etc. Crime (e.g., phishing, hacking, theft, etc.)


Summary

Three perspectives on the knowledge society Primacy of scientific knowledge Rise of knowledge work Networked society

Networked-view of the knowledge society Decentralization of knowledge production, distribution

and consumption More open, democratic social relations Non-market behavior becomes salient

Conflict along the transition is expected

Implications

Levels of analysis:

Societal

Organizational

Individual


Societal level

Development of public policies on:

Scientific and technological research Industrial development (K-intensive industries)

ICT infrastructure (access rights, digital inclusion)

Intellectual property (patents, copyright, commons)

Education (knowledge work and citizenship)


Organizational level

External issues Scan the environment (e.g., public policies, S&T

development, competitors’ behavior, etc. Improve knowledge creation and transfer through

collaborative arrangements and acquisitions Open channels with customers and society

Internal issues Develop absorptive and innovative capacity Manage knowledge work and workers Explore contracting and outsourcing alternatives


Individual level

Learn continuously (knowledge value) Formal and informal education Challenging assignments

Manage own career (value reputation) Market oneself and manage opportunities Cultivate professional and personal networks

Engage in knowledge networks

Develop ethical sense


Summary

Knowledge economy and knowledge society follow distinct paths of analysis

Both have been extensively discussed, but there is much ground for work

Both bring about important practical implications at societal, organizational and individual levels

Types of knowledge work

Integration• Systematic work

• Methodologies and standards

• Integration across functional boundaries

Transaction• Routine work

• Rules and procedures

• Low-discretion workforce or information

Expert• Judgment-oriented work

• Individual expertise and experience

• Star performance

Collaboration• Improvisational work

• Deep expertise across functions

• Fluid deployment of flexible teams

Complexity of work

Lev

el o

f in

terd

epe

nde

nce

JudgmentRoutine

Groups

Individuals

Source: Adapted from Davenport (2005), Thinking for a Living

An emerging relationship through blogs

Andrea accesses past entries from Lilia’s blog

Lilia posts answers to Andrea in her own blog

A new surge in reciprocal posts and comments after some time

Direct exchanges through email and skype

Source: Adapted from Efimova, Lilia (October 03, 2006), Artefacts of a weblog-mediated relationship: a visualisation, retrieved 2006-10-11 <http://blog.mathemagenic.com/2006/10/03.html#a1839>

Protecting the commons

Three layers in the commons infrastructure

Informational(content)

Logical(software)

Physical(network)

Creative commons

Open software

Network neutrality

Forms of control Potential responses

Source: Inspired by Benkler (2006), Wealth of Networks